Business
Global EV Sales Growth Slows, European Automakers Lose Ground Amid Plug-In Hybrid Surge
Global electric vehicle (EV) sales in July 2024 reached 853,000 units, representing a modest 6% year-on-year growth, according to Bank of America’s latest EV Tracker report. The lukewarm performance raises concerns about the sector’s ability to maintain its growth momentum, particularly as European automakers struggle to keep pace with competitors.
The report highlights a notable underperformance among key European brands, including Stellantis, Volkswagen, and Mercedes-Benz, all of which saw significant declines in market share. Stellantis’ share fell to 2.7% in July, down from 4.0% a year earlier. Volkswagen’s market share dropped to 6.6%, and Mercedes-Benz saw a dip to 1.9%, underscoring the difficulties faced by traditional European car manufacturers in the rapidly evolving EV landscape.
“Electric vehicle sales in Germany are suffering from a high comparison base from last year, when subsidies for company cars expired in September 2023,” noted Bank of America analysts.
While battery electric vehicle (BEV) sales saw slow growth, sales of plug-in hybrid electric vehicles (PHEVs) surged by 58%, driven primarily by strong demand in China. This shift reflects consumer concerns about the range limitations and higher costs associated with fully electric models, particularly in Europe.
BMW Bucks the Trend
Amid the challenges faced by European automakers, BMW defied the broader trend with strong growth in its EV market share. BMW’s electric vehicle sales rose by 40% year-on-year in July 2024, pushing its market share to 4.6%. The i4 and iX1 models, along with the newly launched i5, were cited as key drivers of this success.
Unlike some of its competitors, BMW’s decision to prioritize BEVs over PHEVs appears to be paying off, as it continues to capture a larger share of the market.
BYD Overtakes Tesla, Plug-In Hybrids Lead the Way
Chinese automaker BYD continued its ascent, overtaking Tesla to become the global EV leader with a 17.2% market share in July, up from 14.7% in 2023. However, while BYD’s BEV sales in China fell by 7%, its global plug-in hybrid sales surged by 62%, showcasing a shift in consumer preference.
Tesla, on the other hand, saw its global market share drop to 14%, down from 19.4% in the second quarter of 2023, with a particularly sharp decline in Europe due to rising prices for the Model 3 and import tariffs on vehicles manufactured in China.
Challenges for Europe’s EV Market
One of the key barriers to wider BEV adoption in Europe remains the higher total cost of ownership compared to internal combustion engine vehicles. Despite lower running costs, the high upfront prices and significant depreciation of BEVs have deterred many consumers. In Germany, for example, BEV prices remain 20% higher than traditional vehicles, even after subsidies.
Bank of America analysts have revised their forecast for European BEV sales, now predicting a 2% decline for 2024, highlighting the need for lower prices to drive adoption, regardless of regulatory pressures.
Business
Whitbread Reports Profit Decline Amidst UK Market Challenges, Confident in Future Growth
Whitbread, the FTSE 100 leisure group, has announced a 22% decline in pre-tax profits for the first half of the year, reflecting softer demand in the UK market. The company reported flat revenues of £1.57 billion for the six months ending August 29, with pre-tax profits dropping to £309 million. A notable factor in this downturn was a 7% decline in food and drink sales, attributed to a major restructuring of its restaurant operations.
Despite these challenges, Whitbread has reaffirmed its full-year guidance and remains optimistic about a potential recovery in the second half of the year. The company noted an increase in bookings for October and November, suggesting a rebound in consumer confidence.
As part of its growth strategy, Whitbread is focused on expanding its room capacity. The company plans to increase Premier Inn’s UK room count from 86,000 to 98,000 and double its presence in Germany from 10,500 to 20,000 rooms. To facilitate this expansion, Whitbread has accepted offers for 51 of the 126 restaurants it intends to sell. Additionally, plans are underway to convert 112 more restaurants into approximately 3,500 hotel rooms, with planning applications already submitted for a third of these new rooms.
The restructuring plan, which is expected to cost £500 million over the next four years, is reportedly “on track,” according to the company. Notably, Whitbread’s German operations have experienced a 21% revenue boost, driven by what the company describes as the “progressive maturity” of its hotel estate in that market.
Chief Executive Dominic Paul, who took the helm from Alison Brittain last year, expressed confidence in the company’s growth plans. “We are making excellent progress with our plans, and over the next five years, we are set to deliver a step change in our performance, which will fund significant returns to shareholders,” he stated. He emphasized a clear pathway for extending Whitbread’s market-leading position in the UK and capitalizing on favorable supply conditions.
As part of its commitment to returning value to shareholders, Whitbread has announced an interim dividend of 36.4p per share and a £100 million share buyback program. Founded in 1742 as a brewery by Samuel Whitbread, the company has undergone significant transformations over the years, selling its brewing business in 1999 and shifting its focus to hospitality. In 2019, Whitbread divested its Costa Coffee chain to Coca-Cola for £3.9 billion and has since expanded into the German market, which remains a crucial area for growth.
Following the announcement, Whitbread shares rose by 3.6%, or 111p, to £31.83, reflecting investor confidence in the company’s future prospects.
Business
Regulatory Reform Urged to Boost UK Investment and Green Initiatives
Business
Report Calls for Doubling of Remote Gaming Duty to Address Gambling Harm and Fiscal Shortfall
The Social Market Foundation (SMF) has released a report recommending a substantial increase in the Remote Gaming Duty from the current 21% to 42%. This proposed change could potentially generate up to £900 million for the UK Treasury, as the country grapples with a £22 billion fiscal shortfall.
The report, authored by Dr. James Noyes and Dr. Aveek Bhattacharya, highlights the increasing financial burden associated with online gambling, particularly in the realm of casino gaming, which has been linked to heightened rates of gambling-related harm. Fiscal costs associated with this issue are estimated to exceed £1 billion, prompting calls for a reevaluation of how the sector is taxed.
The authors argue that the online gambling sector is currently undertaxed compared to its counterparts in other countries, where operators face higher tax rates. They contend that the UK government has a significant opportunity to modernize its outdated tax system while addressing the social costs tied to gambling, including addiction and related health issues.
In recent years, the surge in online gambling, accelerated by the pandemic, has raised concerns about its impact on public health. Many experts believe that the current tax framework does not adequately reflect the economic and social implications of the industry. By increasing the Remote Gaming Duty, the government could not only bolster public finances but also invest in programs aimed at mitigating gambling-related harm.
The report emphasizes that the increased tax revenue could be earmarked for initiatives designed to support those affected by gambling addiction, funding education and treatment programs, and improving resources for gambling harm prevention.
Critics of the current tax structure argue that the existing rates do not align with the industry’s rapid growth, leading to a disconnect between the benefits enjoyed by operators and the social costs incurred by society. The SMF’s recommendations aim to bridge this gap by ensuring that the online gambling sector contributes its fair share to the economy while addressing the negative consequences of its activities.
As the government seeks to address its fiscal challenges, the SMF’s report may serve as a catalyst for discussions about reforming gambling taxation. With the potential to generate substantial revenue while prioritizing public health, the proposal could reshape the landscape of online gambling in the UK for years to come.
As stakeholders from various sectors weigh in on the report’s findings, the debate over how best to regulate and tax the online gambling industry is set to intensify, highlighting the complex interplay between economic opportunity and social responsibility.
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